Financial System of NepalGroup 6• Anu Katwal• Esha Khokali• Pratil Koju• Sudeep Lama• Sushil Kumar Tripathi

Financial System• It is the transfer of funds from SSU to DSU

Surplus Spending Units• Households• Business firms• Government• foreigners

Deficit Spending Units• Households• Business firms• Government• foreignersFund

s

Financial Intermediari

esFunds

Funds

Evolution of Financial System in Nepal

1994 BS

• Establishment of NBL

2012 BS

• Establishment of NRB under Nepal Rastra Bank Act 1955

2016 BS • NIDC brought the concept of Development Banks in

2025 BS

• Insurance Act 2025 • Later on new Insurance act 2049 was introduced

Financial System of Nepal comprises of banking and non banking Sectors

Evolution of Financial System in Nepal

2040 BS

• Securities Exchange Act 1983 was introduced• Followed by establishment of Securities Exchange

Comission2048

BS• NIDC Capital Markets introduced first Mutual Fund

2050 BS

• Merchant Banking Act 2050 was introduced• SEBON and NEPSE was established under the Securities

Exchange Act 1983• Establishment of Nirdhan Utthan Development Bank

Structure of Financial System

Financial Assets Financial Markets

Financial Bodies and Institutions

• Equity Shares• Preference

Shares• Debentures• Bonds• Treasury bills• Deposits

• Money markets• Capital markets• Corporate debt

markets• Derivatives

Markets• Bond Markets

• Merchant Bankers

• Mutual Funds• Regulatory

bodies• Commercial

banks• Development

banks• Finance

companies• Insurance

companies• Microfinance

Insurance in Nepal• Insurance started in Nepal with establishment of Nepal Mal

Chalani Tatha Bima Company Limited (with 5 lakhs of authorized capital) in 2004 BS

• Later on changed into Nepal Insurance Company in 2048• Until 2024 BS Nepalese people had to depend upon Indian

Insurance companies for big Insurances• Insurance Act 2025 came into existence• Rastriya Bema Sansthan was established by HMG with full

government capital under the insurance act

Insurance in Nepal• After Democracy 2046, New Insurance Act 2049 was introduced• New insurance companies formed each year since then• Currently, there are:

• 9 Life insurance companies• 18 non life insurance companies• While Rastriya Beema Sansthan provide both life and non life

insurance

Banking in Nepal

• Started by late Prime Minister Ranadip Singh in 1877 AD• Tejaratha adda was established at that time.• Tejaratha adda provides credit only, does not accept deposit

from public• The real banking system was started in 1994 BS, with the

establishment of Nepal Bank Limited• Nepal Bank Limited was established by Judha Shamsher

Banking in Nepal

• Later, Nepal Rastra Bank was established in 2012BS• Nepal Rastra Bank started to issue notes in 2016 BS• Agriculture Development Bank was established in 1968 AD• In current situation, there are 30 commercial banks, 84

development banks, 53 financial companies, 37 micro credit(Grameen) development banks

Capital Market in Nepal• Nepalese capital market has been started with the

establishment of Securities Marketing Center in 1976.• In 1984, the Securities Exchange Act was promulgated and this

institution was converted into the Securities Exchange Center(SEC),

• Function of SEC was to assist in the development of capital market.

• SEC perform the role of broker, underwriter and share issuer.• Between 1984-1990, 42 companies were listed.

Capital Market in Nepal• In 1993, the Securities Exchange Act was amended• The securities exchange center was converted into the Nepal

stock exchange.• Securities exchange board was established for oversight

functions as a regulatory body. • Securities traded in capital market.

• Preference share• Equity share• Debenture• Bond

Conclusion• Thus financial system is merely the transfer of funds

from SSU to DSU• Financial System consist of Financial instruments,

financial markets and financial and regulatory bodies• Nepalese Financial system comprises of banking

sectors and non banking sectorsBanking Sectors Non Banking Sectors• NRB• Commercial banks• Development Banks• Finance companies• Micro finance companies

• Merchant Banks• Nepal Stock Exchange• Insurance• CIT• Employee Provident Fund• Mutual Fund

Have a gorgeous day!